Credit Suisse: Chinese interest in Australian property waning

By @preciousvsilva on
A real estate agent's sign outside a house shows that it has recently been sold in Sydney
A real estate agent's sign outside a house shows that it has recently been sold in Sydney October 13, 2014. Reuters/David Gray

The Australian property market is losing its appeal to Chinese investors, according to Credit Suisse Group AG. Chinese demand, which boosted the market previously and raised average Sydney house prices, has been waning because of economic slowdown. Confidence is low, raising questions to the future of real estate in Australia.
 
Credit Suisse analysts Damien Boey and Hasan Tevfik revealed in a report that auction clearance rates are falling in Melbourne and Sydney. Both regions have been popular for Chinese purchases, although that seems to be changing in recent days. There are fewer foreign buyers lately compared to previous periods.
 
Devaluation of China's currency in August has been affecting consumer demand and confidence for overseas real estate globally. Home values have been surging in parts of the United States, Vancouver and Sydney as Chinese investors are retreating to safer zones. For instance, Sydney home values surged 44 percent within three years up to September, thanks to the stream of Chinese buyers and record-low interest rates.
 
“Chinese demand seems to have flattened out,” Bloomberg quoted the Credit Suisse analysts.
 
“It is the cyclically poor condition of the Chinese middle-to-upper class which is driving the slowdown in property buying abroad.”
 
The economists also emphasised the weakening Chinese economy affects the industry more than anything else. Capital flight has tightened credit conditions further affecting or inhibiting income growth wealth. Eventually, this affects the purchasing power of buyers in China. Appetite for global properties is expected to dive by as much as 30 percent this year alone.
 
"All things considered, the likelihood is that Chinese flows into the Australian property market have flattened out in 2015," they added. Nonetheless, this should be good for potential home buyers in the region since there is a less competition, according to the Sydney Morning Herald. Buyers in Sydney, Melbourne and Brisbane can expect better outlooks because of the dampening Chinese demand.
 
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